Some of the reasons I chose to pursue Real Estate Appraisals vs pursuing a career as a Realtor when first entering the industry…
I was in college working on my Bachelors Degree in Business Management when I first seriously thought about becoming an Appraiser. Growing up in a Real Estate family (Landlords, Realtors, Developers, Property Managers), you would think I would have been aware of all careers within the industry. Wrong. I never thought about being an Appraiser once! Appraisers are normally not as flashy, they are not marketing themselves as much; therefore making them less well-known to the general public.
As a 20 year old graduating from college, I wanted to pursue a career that had more stability (in terms of real estate that is – no real estate profession is incredibly stable)! I also wanted to make use of the degree I just completed, while also having the six figure earning potential that other real estate careers have if you work hard enough.
With all that being said, here are a few of the main differences in being an Appraiser vs. Realtor that I have noticed…
- Barriers to Entry
To become a Real Estate Agent, you must have at least a high school education or equivalent, take the mandatory classes (typically 75 hours online or in person depending on the program) and pass the state exam. To become a Certified Residential Real Estate Appraiser, you must have a Bachelors Degree (there are a couple other options. You can see them HERE), complete 200 hours of qualifying education (online or in person), 1,500 hours of experience that you need signed off by an approved trainer and pass the state exam. The photo below gives a visual representation.
Being an Appraiser, there are many more barriers to entry, which means there are a lot fewer of us. It is essentially getting your Masters in Real Estate…. and another Masters if you go on toward a Certified General designation which is what I am doing now.
- Anatomy of the Business
Real Estate Agents typically work for a local agency or choose to work for a larger company with stronger brand recognition such as Keller Williams or Berkshire Hathaway. You receive a commission on each transaction (although it is negotiable, commission is usually around the 6% mark (3% for each agent representing both parties). Out of that commission, there is also a split with your team leader or managing broker. This is all negotiable as well. I have seen 50/50 splits and 90/10 splits depending on the agent and circumstance.
Appraisers, on the other hand, mostly work for smaller, local companies or individually. Although there can be companies where you receive a salary, that is not the norm. It is usually on a fee split basis unless you are a sole proprietor and keep 100% of your earnings. The fee split is unique to you and your mentor and can be negotiable.
You typically will not see your local Appraisers in holiday parades or on social media ads like you would a local real estate office. I have thought about these marketing tactics before and I realize that most Appraisers do not do this because we are not trying to sell our appraisal services to the public, generally. Our major clients are banking institutions and law firms. I tend to have a steady workflow between all of my clients and do not cold call or actively advertise simply because that is not the nature of the business. Of course, I am generalizing based on my personal experiences in my area.
And while I say we do not sell our services, I do want to clarify: everyone, no matter what career you are in, are selling themselves. You are your brand! I am selling myself (my brand, my reputation, my credentials) to my clients. You do not have to be in a sales position to sell yourself, you do it everyday regardless.
I am not saying one if better than the other- just pointing out that there is a difference in business strategy and tactics. I have personally thought of doing ads and social media, but when I looked at my return on value… I realized I already have a full workload and I am already associated with all the banking facilities and most law firms in my area, so who would I be marketing toward? Just questions to ask!
- Income
Alright, alright, alright…. let’s talk more about MONEYYYY!
I try to be very transparent when it comes to money because I wish I had that when entering the field. I will publish another post doing a deep dive on income and my experience. For now, let’s just touch on the basics! Whenever I was first researching income for a Realtor or Appraiser, it never was truly accessible- mostly due to there not being a set income and everyone somewhat drives their own income.
On Mint, it says the Average Residential Appraiser makes $20,000-$200,000. That doesn’t give a great depiction of each level. Within that range, you have Trainee, (some states have Licensed), Certified Residential and Certified General. The same goes for being a Realtor, the range on Mint says they make around $16,000-$173,000. It is worth noting that the average is higher for being an Appraiser than for being a Realtor.
Being an Appraiser does provide a more stable income. For example, in a purchase transaction, the Appraiser gets an order from the bank, calls the Agent to set up the inspection and then completes the report on the computer. Of course, depending on complexity, it can take longer than normal. However, for me, I can write up an average residential report in a couple of hours given there are no unique externalities. With a $450-$500 fee, I average over $100/hour for my time.
Whereas for the same transaction, the Agent might have shown the property numerous times, completed open houses, social media advertising, answered questions around the clock, etc… and that is just to get the property under contract. Once they get the property under contract, they have to work through any issues that arise in the home inspection, appraisal, final walk through, etc. Again, I am generalizing as the roles can slightly change if you are a Buyers Agent vs. Selling Agent, have a FSBO or Transaction Coordinator to handle the paperwork… I could go on and on.
EXAMPLE!!! If an Agent under a company sells a house for $200,000 with a 3% commission, that is $6,000. However, if they are under a company or a team, let’s say they only get half. The split is down to $3,000 and depending on how long it took for them to sell the house, it could drastically shift their $/hour. This could have been months in the making… whereas an Appraiser gets the order completed in 1-2 weeks. This is neither good or bad, this is just an example to show all the factors at play. Please refer to the visual representation of this example.
This visual representation is a very introductory idea of what happens throughout a transaction. There are SO many variables that this is in not entirely accurate, but gets the point across. Again, the $3,000-$6,000 fee is dependent on if the transaction actually closes and also the commission is reflective of what split the Agent might have with their Managing Broker or Team Leader. A team member might only be receiving $1,500 at the end of the day if they split their 3% commission 50/50 with their team leader.
The point is, Realtors spend much more time involved in the transaction and get paid only if all the dominos fall in line. Appraisers are only a piece of that line and get paid regardless (typically). These are things to look at when deciding on a career and your needs specifically. As you can see, the income potential can drastically change depending on your market, fee splits/commissions, and YOU! Both careers are amazing but you make it what you want it to be.
Overall, both are AMAZING careers and I have intentions of being both a Certified General Appraiser, along with being a Realtor. Yes, you can be both. That is a complete other blog post that I will write as there are challenges to that. I hope this helps shed light on both careers from an insider who is living and breathing it everyday. There is so much that goes into both fields and I barely scraped the surface. Please feel free to reach out if you have any questions!
